Facts of the Case

The Petitioner challenged an order dated 30.12.2023 passed under Section 73 of the CGST Act, whereby a demand of ₹88,34,701 along with penalty was raised pursuant to a Show Cause Notice dated 24.09.2023.

The Show Cause Notice alleged:

  • Excess claim of Input Tax Credit (ITC)
  • Improper ITC under reverse charge
  • ITC reversal on non-business transactions and exempt supplies
  • Under-declaration of ineligible ITC

The Petitioner had filed a detailed reply dated 17.10.2023 along with supporting documents addressing each allegation. However, the adjudicating authority passed the impugned order stating that the reply was “unsatisfactory” without providing reasons.

Issues Involved

  1. Whether an order passed under Section 73 CGST Act without proper consideration of the taxpayer’s reply is sustainable in law.
  2. Whether failure to provide reasoning and opportunity of hearing violates principles of natural justice.
  3. Whether such an order qualifies as a “non-speaking order” liable to be set aside.

Petitioner’s Arguments

  • The impugned order is cryptic and non-speaking, as it does not deal with the detailed reply submitted.
  • The adjudicating authority failed to apply its mind and merely labeled the reply as “unsatisfactory.”
  • No opportunity was provided to clarify or submit further documents, violating principles of natural justice.
  • The order lacks reasoning and therefore cannot be sustained.

Respondent’s Arguments

  • The department maintained that the reply and records available on the GST portal were examined.
  • It was contended that the reply submitted by the taxpayer was not satisfactory.

Court Findings / Order

The Court held:

  • The adjudicating authority failed to consider the detailed reply on merits.
  • Simply stating that the reply is “unsatisfactory” reflects non-application of mind.
  • No opportunity was given to the petitioner to provide clarification or additional documents.
  • The impugned order is therefore unsustainable in law.

Final Order

  • The order dated 30.12.2023 was set aside.
  • The matter was remitted back for fresh adjudication.
  • The Petitioner was directed to file a reply within 30 days.
  • The Proper Officer must:
    • Grant personal hearing
    • Pass a fresh speaking order
    • Comply with Section 75(3) CGST Act

Important Clarifications by Court

  • The Court did not examine the merits of the case.
  • All rights and contentions of both parties were kept open.
  • Challenge to Notification No. 9 of 2023 (regarding extension of time) was left open.

Link to download the order - https://delhihighcourt.nic.in/app/showFileJudgment/62716042024CW54292024_110523.pdf

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